Money
Simple Interest Calculator
Enter the principal, the annual interest rate, and the time (in years, months, or days). The calculator returns the simple interest earned or owed, the total amount, and the time expressed in years for the standard formula.
The starting amount. · e.g. 10,000
Nominal annual rate. · e.g. 5
e.g. 3
Interest earned or owed
$1,500.00
Total amount $11,500.00 · 3 years at 5%
Simple interest is computed only on the original principal. For interest that earns interest, use the compound interest calculator instead.
Examples
$10,000 · 5% · 3 years
Interest $1,500 · total $11,500
$5,000 · 6% · 18 months
Interest $450 · total $5,450
$2,500 · 7% · 90 days
Interest ≈ $43.15 · total ≈ $2,543.15
$1,000 · 0% · any time
Interest $0 · total $1,000
How it works
Simple interest is the most basic interest model. The interest is a straight product of the principal, the annual rate, and the time in years. Nothing accrues on prior interest.
Simple interest
I = P × r × t
Total amount
A = P + I
The parts
- I = interest earned or owed
- P = principal
- r = annual interest rate (decimal)
- t = time in years
- A = total amount
For months, divide months by 12 to get years. For days, divide days by 365. The calculator does this automatically when you pick the time unit.
What the calculator does
The simple interest calculator takes three inputs (principal, annual rate, and time) and applies the formula I = P × r × t. It returns the dollar interest, the total amount, and the time expressed in years so you can sanity check the conversion. It is the right tool for short-term loans, T-bills, and any problem that asks for interest without compounding.
How to use it
- Enter the principal.
- Enter the annual interest rate as a percent.
- Enter the time and pick the unit (years, months, or days).
- Read the interest, the total amount, and the conversions in the breakdown.
Worked examples
- $10,000 · 5% · 3 years: interest = 10,000 × 0.05 × 3 = $1,500, total $11,500.
- $5,000 · 6% · 18 months: time = 18 ÷ 12 = 1.5 years; interest = 5,000 × 0.06 × 1.5 = $450, total $5,450.
- $2,500 · 7% · 90 days: time = 90 ÷ 365 ≈ 0.2466 years; interest ≈ 2,500 × 0.07 × 0.2466 ≈ $43.15, total ≈ $2,543.15.
- $1,000 · 0% · any time: interest = 0, total stays at $1,000.
Simple interest vs compound interest
Both compute interest on a principal at a rate over time, but they treat accrued interest differently:
- Simple interest is calculated only on the original principal. The interest the same dollar amount each year for a given rate. The growth is linear.
- Compound interest is calculated on the principal plus any interest that has already been added. The interest grows the balance that next year's interest is calculated on. The growth is exponential.
Concrete comparison at $10,000, 5%, over 10 years:
- Simple interest: 10,000 × 0.05 × 10 = $5,000 interest. Total: $15,000.
- Compound interest (annual): 10,000 × (1.05)^10 − 10,000 ≈ $6,288.95 interest. Total ≈ $16,288.95.
Use simple interest for short-term loans, treasury bills, and textbook problems framed as simple interest. Use the compound interest calculator for savings accounts, investment growth, mortgages, and most multi-year scenarios.
Time unit conversions
- Months to years: divide by 12. 18 months = 1.5 years; 6 months = 0.5 years.
- Days to years: divide by 365. 90 days ≈ 0.2466 years; 30 days ≈ 0.0822 years.
- Years stay years: 2.5 years means t = 2.5 in the formula.
The calculator does each conversion in the background and shows the time-in-years value alongside the input so you can verify it.
Where simple interest shows up
- Short-term personal loans and signature loans.
- Some car loans and dealer financing that quote simple interest.
- Treasury bills and short-term bonds.
- Many introductory algebra and finance textbook problems.
- Some short-term certificates of deposit.
Many credit cards, savings accounts, and amortized mortgages use compound interest instead. Check the underlying loan or account terms before assuming which model applies.
Common mistakes
- Plugging in months as years (or vice versa). Always use time in years, or let the calculator handle the conversion via the unit toggle.
- Forgetting to convert the rate to a decimal. 5% is 0.05 in the formula, not 5.
- Treating simple interest like compound interest over long horizons. The gap grows quickly past a year or two.
- Mixing 360-day and 365-day conventions. This calculator uses 365 days per year by default.
- Forgetting fees and other charges. Simple interest is only one component of a real loan's total cost.
Related tools
- Compound interest calculator for interest that earns interest, with optional monthly contributions and any compounding frequency.
- APY calculator for converting a nominal rate plus compounding into an effective annual yield.
- Loan calculator for amortized loan payments and total interest.
- CD calculator for a fixed-term, fixed-rate certificate of deposit using APY.
- All money calculators.
Note. The calculator implements the standard simple interest formula. Real loans and savings products often include fees, daily accrual rules, or compounding that this calculator does not model. Use it for clean problem-set math and quick sanity-check estimates.
Frequently asked questions
Simple interest is interest calculated only on the original principal, not on interest that has already accrued. The formula is I = P × r × t, where I is the interest, P is the principal, r is the annual rate as a decimal, and t is the time in years. The total amount owed or earned is A = P + I.
I = P × r × t for the interest, and A = P + I for the total. For example, a $10,000 principal at a 5% annual rate over 3 years earns 10,000 × 0.05 × 3 = $1,500 in simple interest. The total amount after the term is $11,500.
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus any interest that has already accrued, so it grows faster over time. For short periods or one-time loans, the difference is small. For multi-year investments, compound interest produces a noticeably larger result. See the compound interest calculator for the compounding case.
Enter time in years, months, or days using the unit toggle. The calculator converts months to years by dividing by 12 and days to years by dividing by 365. The underlying formula always uses time in years to match the annual interest rate.
Either enter the time in months directly and the calculator converts to years, or convert manually: time in years = months ÷ 12. For example, 18 months equals 1.5 years. Then plug 1.5 into the formula.
Use 365 days in a year. For example, 90 days equals about 0.2466 years. The calculator does this conversion automatically when you pick the days unit. Some loan agreements use 360 days for simplified accounting, but 365 is more accurate for typical math problems.
Many short-term loans, some personal loans, certain car loans, treasury bills, and short-duration certificates of deposit calculate interest on a simple-interest basis. Many savings accounts and most credit cards use compound interest, not simple interest.
No. Negative principal, rate, or time inputs are not allowed in this calculator. If a problem describes a loss, model it separately. Simple interest itself is always a positive number when the inputs are positive.
For simple interest the conversion is just division: monthly rate = annual rate ÷ 12, daily rate = annual rate ÷ 365. The calculator does this conversion automatically when you choose the time unit. For compound interest the conversion is different because compounding interacts with the period.
No. It models only simple interest as described by the formula. Real-world loans can include origination fees, late fees, or insurance that are not part of the simple interest calculation. Add those separately if you need a total cost figure.
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